-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:
A) $100
B) $200
C) $300
D) $400

Question

-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:
A) $100 
B) $200 
C) $300 
D) $400

Quizplus · Accepted Answer

The equilibrium level of GDP is $200 because at this level, the planned aggregate expenditure (AE) is equal to the real GDP (Y). AE is the sum of consumption expenditure (C), investment expenditure (I), government expenditure (G), and net exports (NX). In this case, C = $100, I = $50, G = $25, and NX = $25. Therefore, AE = $200. Since AE = Y, the equilibrium level of GDP is $200.

-Refer to the Above Information